Chapter 4 - Job Costing Flashcards
What are some cost allocation base(s) to use for allocating indirect costs to the cost object?
labour hours for labor intensive job
machine hours for factory manufacture
Seven Step Method
- Identify the job - the cost object
- Identify the direct cost of the cost object
- Select the cost allocation base(s)
- identify and add all indirect costs into one indirect cost pool.
- Compute indirect cost allocation rate
- Compute indirect cost assigned to the cost object
- Compute the total cost of distinct job by adding all direct and indirect costs assigned to the job
Actual manufacturing overhead rate =
Actual manufacturing overhead rate = actual manufacturing overhead costs / actual quantity of cost allocation base
overhead allocation rate - when distributing OH through direct labor costing
Total overhead
_________________
Total direct labor hours
Total cost
(Variable Costs per unit x units produced) + Total Fixed Costs
Variable cost per unit
Total variable cost
_________________
Number of units produced
Overhead allocation rate (different cost drivers)
Cost driver activity level
Contribution Margin Ratio
if totals are known
Total Contribution Margin
_______________________
Total Sales
Contribution Margin Ratio
if per unit figures are known
contribution margin per unit
__________________________
sales price per unit
Net income (calculated with contribution margin and sales volume)
(Sales volume x contribution margin per unit) - fixed costs
or
total contribution margin - fixed costs
Net Income
with contribution margin ratio
(Sales x Contribution margin ratio) - fixed costs
Net Income
Total contribution margin - fixed costs
(Sales Volume x contribution margin per unit) - fixed costs
(Sales x contribution margin ratio) - fixed costs
margin of safety (in dollars)
Sales (actual) - Sales (BE)
Margin of Safety (in units)
Unit sales (actual) - Unit Sales (BE)
Operating Leverage
Total Contribution Margin
_______________________
Net Income
